Nasdaq leads market lower

NEW YORK (CNNMoney.com) -- Tech stocks slipped Monday afternoon, dragging down the Nasdaq composite and forcing the Dow industrials to give back bigger gains, as investors retreated after the recent rally.

The tech-fueled Nasdaq composite (down 16.38 to 2,545.84, Charts) lost 0.6 percent, with around 2 hours left in the session. The Dow Jones industrial average (up 16.17 to 13,342.39, Charts) added a few points, while the broader S&P 500 index (down 2.66 to 1,503.19, Charts) lost 0.2 percent.

Stocks rose Friday after a mild reading on inflation raised bets that the Federal Reserve might cut interest rates later in the year.

But the tone was less upbeat Monday, as investors welcomed the majority sale of Chrysler to a private equity firm, but hesitated ahead of a slew of economic reports. Tuesday's Consumer Price Index (CPI) and its inflation-tracking component, the Core CPI, kick off a busy week that includes readings on manufacturing, housing and consumer sentiment.

"It looks like it's going to be one of those sideways days," said Joseph Saluzzi, co-head of equity trading at Themis Trading. "There's really nothing that's moving us other than the Chrysler news and we've got CPI tomorrow."

Saluzzi said that the way the market has been over the last month, investors are looking to each economic number to confirm or refute the perspective on the economy and on what the Federal Reserve might do in terms of interest rates. With the way the current sentiment is, he said a pretty mild reading on consumer prices tomorrow would be desirable to stock investors, as it would raise hopes that the central bank might cut rates later this year.

Stocks were also a little vulnerable after the recent advance, which sent the Dow industrials to an all-time high and lifted the S&P 500 and Nasdaq to more than 6-year highs.

Stocks surged between the end of February and the first week of March, with the Dow industrials rising for 24 out of 27 sessions, matching the longest up streak in nearly 80 years. The advance also sent the S&P 500 to within 15 points of an all-time high hit in March 2000.

DaimlerChrysler said it will sell an 80 percent stake in Chrysler, its U.S. auto unit, for $7.4 billion to private equity firm Cerberus Capital Management. DaimlerChrysler (up $1.77 to $83.77, Charts) shares jumped more than 3 percent in morning trade.

Shares of automaker rivals Ford Motor (up $0.38 to $8.75, Charts, Fortune 500) and General Motors (up $1.10 to $30.56, Charts, Fortune 500) jumped in tandem. Bear Stearns boosted its rating on GM, Reuters reported, saying that the Chrysler sale was beneficial to both GM and Ford.

In other deals news, Mylan Labs (down $2.54 to $19.86, Charts) said it will buy German drugmaker Merck KGaA's generic drug unit for $6.7 billion. Mylan shares slumped on the news.

Nokia (up $0.93 to $26.00, Charts) shares gained after the telecom boosted its market share forecast for the second quarter.

Applied Materials (up $0.67 to $20.44, Charts, Fortune 500) gained 3.5 percent in active trade, rising ahead of its quarterly earnings release, expected Tuesday evening.

Yahoo (down $0.78 to $29.27, Charts, Fortune 500), Dell (down $0.51 to $25.30, Charts, Fortune 500), Qualcomm (down $0.67 to $44.19, Charts, Fortune 500) and Cisco Systems (down $0.34 to $26.29, Charts, Fortune 500) were among the heavily-traded tech shares dragging on the Nasdaq.

Other decliners were in the financial, gold, silver and homebuilding sectors.

Market breadth was negative. On the New York Stock Exchange, losers beat winners 5 to 3 on volume of 820 million shares. On the Nasdaq, decliners topped advancers 2 to 1 on volume of 1.21 billion shares.

U.S. light crude oil for June delivery rose 43 cents to $62.80 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery fell $2.30 to $670 an ounce.

Treasury prices slipped, lifting the yield on the 10-year note to 4.69 percent from 4.67 percent, roughly where it stood late Friday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar slipped against the euro and rose against the yen.